Officials in several Alaska municipal governments have begun expressing concern about how their respective communities have been left out of the natural gas pipeline talks between the administration of Gov. Sean Parnell and the leaders of the three major oil companies operating on the North Slope.
The local officials, including Mayor Luke Hopkins of the Fairbanks North Star Borough, are concerned about the impact that a January agreement between the administration and the oil companies might have on local property taxes.
Specifically, they point to a provision authorizing the commissioner of the Alaska Department of Natural Resources to negotiate financial terms of a gas pipeline with the three oil companies. Those negotiable terms include allowing the companies to pay local property taxes through a system known as “payment in lieu of taxes” rather than through the usual value-based system that applies to residential and commercial property and that can fluctuate from year to year.
Mayor Hopkins and leaders of the Kenai Peninsula Borough, the North Slope Borough, and the city of Valdez are mobilizing to get a feel for the potential impact. They say it’s urgent because the Legislature is considering bills that would implement the agreement reached between the governor and the oil executives.
What these local leaders want to do is hire one or more consultants to rapidly gauge the impact the agreement could have on property taxes that would be levied on the gas pipeline as well as on taxes levied on existing oil company property.
The idea is for each of the four local governments to provide $50,000 for the work. The funding request by Mayor Hopkins is scheduled to be considered at a Thursday work session of the Finance Committee of the Borough Assembly.
Language accompanying the funding ordinance spells out the mayor’s frustration:
“(M)unicipalities were not invited to comment on the terms of the Heads of Agreement, and to date, have not been invited to participate in the state’s ongoing efforts to negotiate with the producers nor received any briefing or information about the potential impacts to municipalities. .”
Most Alaskans — and probably most local government officials — would agree that construction of a natural gas pipeline from the North Slope is in the state’s best interest. Nevertheless, local leaders need to be assertive in making sure their local governments aren’t harmed in the process. That’s what they are supposed to do.
Spending $50,000 now to join with other municipalities to get some good information about the property tax impact is a smart investment. Coming up short in property taxes on oil company property, whether on the gas pipeline or on existing property, could affect your own property tax bill.
— Fairbanks Daily News-Miner,
March 4
